Aditi Nayar, Chief Economist at ICRA, said, “Buoyed by stocking ahead of GST rationalisation-fueled demand during the festive season, the IIP growth for September 2025 remained steady at 4%, shrugging off the slowdown seen in the core sector growth.”
Factory output, measured by the Index of Industrial Production (IIP), was higher than the 3.2 percent growth recorded in September 2024. The NSO also revised August 2025’s growth figure upward to 4.1 percent from the earlier provisional estimate of 4 percent.
Within sectors, manufacturing output rose 4.8 percent in September 2025, up from 4 percent in the same month last year. Mining activity, however, slipped 0.4 percent compared with a modest 0.2 percent growth a year ago. Electricity generation increased 3.1 percent, improving from 0.5 percent in the year-ago period.
“The expansion in manufacturing output accelerated to 4.8% in September 2025 from 3.8% in August 2025, despite an adverse base, even as the mining and electricity segments witnessed a deterioration in their YoY growth performance between these months,” Nayar said.
For the first half of FY26 (April–September), overall industrial production grew 3 percent, lower than the 4.1 percent recorded during the same period in FY25.Meanwhile, the Commerce Ministry’s data showed that growth across India’s eight core industries slowed sharply to 3 percent in September from 6.5 percent in August. The drop was led by contractions in refinery products, natural gas, and crude oil, which outweighed strong gains in steel and cement output.Steel production surged 14.1 percent and cement output climbed 5.3 percent, reflecting ongoing infrastructure momentum. But refinery output declined 3.7 percent, natural gas production fell 3.8 percent, and crude oil dropped 1.3 percent — highlighting persistent weakness in India’s energy sector.
“Overall, the combination of GST rate rejig, pent-up demand and the early festive onset appears to have boosted demand in September-October 2025, which is expected to augur well for the growth in manufacturing output in October 2025 as well. While the GST rationalisation may support demand for regular-use/smaller ticket items post the festive season, the sustenance of the buoyancy in demand for big-ticket items remains to be seen,” Nayar said.
